Increases in petroleum prices to continue

Chairman of the Association of Oil Marketing Companies, Kweku Agyemang-Duah, has said the increases in prices of petroleum products will not end anytime soon.

He said the recent increases is as a result of the continuous fall of the Cedi, the Special Petroleum Tax (SPT) and the decision of the Organisation of the Petroleum Exporting Countries (OPEC) to cut supplies.

Speaking on Joy FM’s Super Morning Show, Mr Agyemang-Duah said “The apparent increase of the fuel prices rests on the ex-refinery prices and the Cedi-dollar exchange rate. Getting to the X’mas, we had the exchange rate going up and it still has not stabilized yet…and the issue about OPEC and non-OPEC countries trying to stifle supply so all these mitigate against the pricing.

“Besides the ex-refinery prices, we have other components like the SPT, so as soon as the ex-ref goes up, we expect to have more of SPT coming up. These have not worked in our favour this month.”

Prices of petroleum products have gone up between 9 and 11 percent for the first pricing window in January.

For the past two weeks, a gallon of petrol has gone up from GHS14:00 to GHS19:00.

The SPT was introduced in 2015 as part of measures to rationalise the Value Added Tax (VAT) regime and change the petroleum pricing structure.

The 17.5 percent tax is levied on petrol, diesel, liquefied petroleum gas, natural gas and kerosene as part of the VAT reform, alongside a change in the petroleum product pricing structure.

The increases have been compounded by a decision by the OPEC countries to cut 1.2 million barrels off its supply.

This followed more than two years of depressed oil prices, which have more than halved since 2014, due to an excess of supply on the market.

In response to how things are looking for the future, Mr Agyemang-Duah said considering the posture of the OPEC and non-OPEC countries and “the way our Cedi-Dollar relationship is, it is not looking too good and we must brace ourselves for what is going to happen.”

For him, the only valve that can be opened up to help consumers is to take a look at the SPT.

He said the 17.5 percent slapped on petroleum products as a result of the SPT means that once Excise Duty, Energy Debt Recovery, Energy Fund Levies and Fuel Marking Margin are added, prices will swell up at the pumps.

“So if we could twitch it to a lower level, now that we are having high prices on the world market, it will bring some relief to the average consumer,” he stressed.